Spain's Zapatero sworn in for second term

"I promise on my conscience and honour to comply faithfullywith the obligations of Prime Minister," Zapatero said, hisright hand on a copy of the constitution in front of King JuanCarlos during a ceremony at the Zarzuela palace near Madrid.

Later, Zapatero named the pregnant Carme Chancon as Spain'sfirst female defence minister, moving her from the HousingMinistry, and he installed Miguel Sebastian, his former chiefeconomic adviser, as industry minister.

Women outnumber men for the first time a Spanish cabinet --nine to eight -- continuing the reformist bent of the Socialistgovernment which was re-elected on March 9.

One of them, Bibiana Aido, becomes Spain's first EqualityMinister and at 31 years old, the youngest to sit at thecabinet table.

Announcing his rejigged team, Zapatero stressed theimportance of a new Science and Innovation Ministry, headed byCristina Garmendia, which is designed to wean Spain off itsdependence on construction and to nurture hi-tech industries.

"It should help our economy grow more but above all, growbetter," the prime minister said during a news conference.

Spain has one of the eurozone's lowest productivity growthrates and the now-shrinking construction sector will drageconomic growth down to just 1.8 percent in 2008 according tothe International Monetary Fund -- less than half that enjoyedlast year.

MR ENERGY

Sebastian's appointment at industry, a portfolio whichincludes the energy sector, is significant not only because ofthe role he is widely thought to have played in the two yeartakeover battle for power utility Endesa, but also the pivotalrole he will play any further sector shakeup.

Sebastian is thought to have opposed a counter-bid forEndesa from Germany's E.ON and backed eventual winners, Italianutility Enel and Spanish infrastructure group Acciona.

Analysts speculate that because Sebastian is not a Catalan-- the first industry minister in over a decade not to comefrom the northern region -- he will not look so favourably on arumoured tie up between Catalonia-based Gas Natural andIberdrola, Spain's largest utility.

That in turn might ease a possible bid for Iberdrola fromFrance's state-controlled utility EDF. Speculation is rife thatZapatero has already given EDF the green light to bid forIberdrola during a recent summit with France's Nicolas Sarkozy.

The Socialists were re-elected with 169 seats in parliament-- 7 short of an absolute majority -- and will have to rely onthe support of regional or left-wing parties to push throughtheir legislative agenda.

The failure to appoint a Catalan industry minister may irkmoderate Catalan nationalist party CiU, which is the onlysingle group in parliament with enough seats to help theSocialists pass legislation.

The widely-respected Pedro Solbes, 65, continues as economyminister, but in contrast to conditions four years ago, thistime he faces inflation at 4.5 percent, much lower growth andunemployment which will grow by 800,000 over the next two yearsaccording to Spain's largest business group.

(Reporting by Ben Harding)